It was a day of disappointment for investors as Yelp (NYSE: YELP) once again failed to impress with its latest earnings report, causing its stock to plummet by 13.6% as of 1:11 p.m. ET. The review site’s fourth-quarter earnings were in line with estimates, but the weak outlook for 2024 left investors disheartened.
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A Mediocre Performance
Yelp’s most recent quarterly results were mostly on par with what analysts had predicted. Revenue for the period increased by 11% to $342.4 million, slightly surpassing the consensus of $341.3 million.
The company experienced widespread growth in 2023, with significant contributions from categories such as home services and self-serve ads. Additionally, Yelp introduced 60 new product features and updates during this time.
On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) surged by 20% to $96.1 million. Moreover, the company reported a generally accepted accounting principles (GAAP) profit per share of $0.37, up from $0.28 in the same quarter of the previous year, although it fell short of estimates by a penny.
CFO David Schwarzbach stated, “Investments in our long-term strategic initiatives have led to multiple records as local advertisers continued to see the value of Yelp’s high-intent audience in 2023.”
Grim Prospects Ahead
Despite solid performance in 2023, Yelp foresees a deceleration in both revenue and profit growth for 2024. The company’s outlook anticipates revenue in the range of $1.42 billion to $1.44 billion, a mere 7% increase from 2023 and lower than the consensus of $1.46 billion. Moreover, it expects adjusted EBITDA to fall within the range of $315 million to $335 million, with the midpoint slightly below the $330 million reported in 2023.
Management attributed the forecast to investments in its services initiatives. While Yelp deserves recognition for achieving steady, growing GAAP profitability, it’s not surprising that the stock took a hit given the lackluster forecast for 2024.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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